Outsourcers see big opportunities in association biz

A growing number of firms emerging in Ottawa are providing management outsourcing services for the non-profit sector.

The city is attractive to firms catering to that niche market, local experts say, because Ottawa attracts many national non-profit groups.

One of the newest on the market is the Association Management Company. Formed in August and based in Toronto with a Kanata office, its goal is to provide specific services "a la carte" to non-profit groups, depending on need.

Whichever service the non-profit groups sign up for, the company promises to provide them more quickly, more efficiently and with more efficiency than the non-profit group could do in house.

"There's a lot of associations out there," said Bonnie James, the company's finance and Ottawa office manager. "Some are small, some are big. Some have offices, some work out of a post office box."

Whatever the size, Ms. James said, the Association Management Company provides expertise on demand and, she added, likely saving them money: from membership database management to event planning to year-end financials and even internal communications.

Right off the bat, said Kip Sharpe, the company's director of business development, companies that outsource their management needs to their firm can ditch a standard bricks-and-mortar office and all the costs associated with one.

"No rent, no insurance, no computers, no overhead," said Mr. Sharpe. "All that's gone from the start."

"We provide a pool of people who have experience in the field and can help smaller associations, where they would like an office but they don't want the overhead," agreed Ms. James. "They don't want to hire people, worry about vacations, all that. Overall, it saves them money, until they want to get bigger and get those things."

In the Internet age, she said, businesses like the Association Management Company can perform all those tasks out of their own headquarters.

The firm is new, and is still looking to land its first client, likely to a three-year contract, a standard length in the industry, Mr. Sharpe said. It joins the four or five others in Ottawa already providing similar services.

"We're writing a lot of proposals right now," said Ms. James. They are targeting smaller, national groups from the 600 or so they estimate are in Ontario, instead of the very large associations, for example the Canadian Medical Association, that have the scale and resources to perform all those tasks in-house.

"The bigger ones probably don't need our management services, but could probably use our consulting services, or surveys. Or they may just want to outsource their conference, or events." she said. "(But) we gear our proposals more to the smaller associations."

What's the price of such a service? Companies like Ms. James' prefer to phrase the question differently - how much will the associations save if they sign over to them?

"It would really depend on the client. It depends on the number of members they have. Obviously, we would work within their budget. Everyone is looked at individually."

Ottawa, home of Canada's Parliament, is also host to many of the country's non-profit groups, particularly those sustained by public monies or that include political lobbying among their activities.

He's written a number of books on the association industry, and provided the OBJ with some estimates on its impact on the Ottawa economy.

He said that the Canadian Society of Association Executives (CSAE), the so-called "association of associations," attracts the country's largest groups into its fold with the professional development courses it offers.

Its members reportedly employ about 20,000 Canadians, and have a combined annual budget of about $3 billion in Canada. About a quarter of CSAE's membership is in Ottawa-Gatineau, Mr. Pealow said. Using that figure, he estimated that the non-profit industry in Ottawa generates about $500 million locally a year, and employs some 5,000 residents.

"The bulk of the national associations have their head offices in Ottawa," he said, with the remainder scattered in Toronto, Montreal, Hamilton and Winnipeg. "The majority, however, are in Ottawa."

Many, he said, hold conferences annually or semi-annually, bringing real dollars to Ottawa's tourist industry. "They do have an impact on the community, there's no doubt," he told the OBJ.

Not included in figures from the CSAE however, which tends to attract just the largest associations, are all the smaller ones. Largely volunteer driven with just the minimum number of paid staff, they are the kinds of groups targeted by the Association Management Company and others.

More and more are forming all the time, Mr. Pealow added, and catering to them is becoming more popular, a trend that could continue if Canada follows suit with what has happened in the United States.

"The whole concept of outsourcing management has not been embraced here as it has in the States," he said. "Certainly, the number of not-for-profits continues to increase. People are taking on more clients."

But are outsourced managers as effective as existing managers? Are their hearts into the job to the same extent as executive directors who were hired specifically to work for one association? The industry said yes.

"Generally, salaries for the not-for-profits have to be competitive," Mr. Pealow pointed out. "While (existing staff) may believe in the cause, they're still getting paid to do it."

"Realistically, we're in a contract," added Mr. Sharpe. "I would suggest that we're taken to task more often than the staff because we have to fulfill a commitment."

AMCES, Mr. Pealow said, keeps the number of clients to just five, and occasionally turns down new requests. He said he prefers to invest more time in less clients rather than spreading themselves thin.

That means that there is room for growth for companies like The Association Management Company.

"In the last decade, people are saying more and more that we need it done right away, and we need it done by an expert," he said. "The whole concept is changing. People are realizing you don't have all the expertise in your staff. You'll need to outsource, especially if you want to grow.

"But the growth is limited," he added. "They call them not-for-profits for a reason: they've got no money."